When Cowboy Ventures founder Aileen Lee coined the term ‘unicorn’ in 2013 to refer to startups with a valuation north of $1 billion, the moniker alluded to the rarity of such companies, much like the mythical single-horned creature.
At the time, India was home to just three unicorns — InMobi, Flipkart, and MuSigma, according to Venture Intelligence data.
In Southeast Asia, meanwhile, Lazada was the lone member of the club. Grab and Vietnam’s VNG joined only in 2014, as noted in DealStreetAsia DATA VANTAGE’s Private Capital Markets Report released this week.
Cut to 2021, and the term ‘unicorn’ has become a bit of a misnomer. A mega fundraising blitz has ensured that $1-billion-plus startups are no longer rare.
Southeast Asia alone has minted 19 unicorns so far this year and is on track to surpass the total number of such companies minted over the past decade.
This week, Indonesian fintech startup Ajaib became the latest to earn the tag after a $153 million Series B round led by DST Global. The firm, which allows users to buy and sell stocks and mutual funds on its platform, is the 40th ever unicorn from Southeast Asia and Indonesia’s seventh.
Ajaib’s unicorn tag also underscores the popularity of fintech startups among PE and VC investors. The sector is most likely to give birth to the next crop of companies that command ten-digit dollar valuations, say experts.
Fintech startups have raised the highest funding ($3.2 billion) and sealed the most number of deals (147) in the year so far, notes the Private Capital Markets Report, which added that startup funding is poised to exceed $20 billion this year. The report is a must-read not just for its comprehensive list of Southeast Asian unicorns, but also a table of over 100 soonicorns.
Investors, too, are upbeat on the region. SE Asia continues to remain attractive for the private equity asset class in the post-COVID context, what has changed is the diversion of liquidity into tech deals, said Navis Capital’s Nicholas Bloy at DealStreetAsia’s Asia PE-VC Summit 2021.
In India, meanwhile, unicorns are being minted at a much more frenetic pace. Three new startups — meat delivery startup Licious, crypto firm CoinSwitch Kuber, and cloud kitchen startup Rebel Foods — entered the coveted club this week alone.
Thirty-one Indian startups have crossed the $1 billion valuation milestone so far in 2021. By 2025, it is expected that the country will be home to 100 unicorns, compared with more than 60 now.
The COVID-19 pandemic has transformed India like never before and has given a huge fillip to domestic companies that are building software systems for the world as the concept of work from home evolves, said Haresh Chawla of True North at DealStreetAsia’s Asia PE-VC Summit 2021.
More unicorn news
What next after entering the unicorn club? A public listing? Some of Southeast Asia’s early unicorns are currently clearing the decks to become publicly-listed entities.
GoTo, the holding company that controls Indonesian unicorns Gojek and Tokopedia, has acquired all shares held by overseas entities in its fintech arm GoPay, which is now 100% owned by GoTo. The move will help it comply with domestic ownership laws ahead of a planned local listing next year.
Also this week, GoTo picked up stakes in the Lippo Group’s investment arm Multipolar (MLPL) and retail unit Matahari Putra Prima (MPPA), through market transactions. GoTo’s purchase of stakes in Lippo Group entities and the latter’s proposed participation in the former’s pre-IPO round are seen as a larger move to further cement the ties between the two.
Meanwhile, Tokopedia — along with the Lippo Group and Tokyo Century Corporation — sold its entire stake in the payments firm OVO to Nasdaq-bound Grab.
Grab, subsequently, shed some of its stake in OVO to an entity owned by the president director of the media and tech conglomerate Emtek, again, to comply with domestic ownership laws.
Emtek, also an investor in IDX-listed Bukalapak, and Grab have cross-holdings and have been exploring ways to bring synergies in their businesses.
In a separate development, regulatory documents accessed by DealStreetAsia – DATA VANTAGE showed Emtek picking a stake in Singaporean B2B payments unicorn Nium.
In another fintech deal in Indonesia, Silicon Valley VC Ribbit Capital invested in Gojek-backed Bank Jago. DealStreetAsia has learned from sources that Ribbit Capital owns less than 5% in Bank Jago.
In India, meanwhile, unicorns OfBusiness and Byju’s were in the fundraising news this week.
OfBusiness, a B2B e-commerce platform, raised $200 million in a Series F round led by Tiger Global Management at a valuation topping $3 billion.
Indian edtech major Byju’s is raising about $296 million in a Series F funding round led by Oxshott Venture Fund, according to media reports.
Moving on to other big deals of the week.
Big deals and IPO news
Vietnam-based blockchain game publisher Sky Mavis, the company behind the NFT game Axie Infinity, raised $152 million in a Series B funding round led by US investor Andreessen Horowitz (a16z).
Ula, a Jakarta-based B2B marketplace, raised $87 million in a Series B round led by Prosus Ventures, Tencent Holdings and B Capital. The round also saw the participation of Amazon founder Jeff Bezos’s Bezos Expeditions.
Singapore-based cash rewards and discount company ShopBack has raised $40 million in a Series E round led by state investor Temasek, showed regulatory filings accessed by DealStreetAsia this week.
Funding Societies, popularly known as Modalku in Indonesia, is in advanced talks with investors to raise over $50 million in a fresh funding round, according to sources aware of the development.
Singapore- and San Francisco-based SaaS platform LeadIQ has raised $30 million in a Series B round led by Cathay Innovation.
Vietnamese e-commerce enabler Society Pass is seeking to raise as much as $27 million through a Nasdaq IPO, according to its listing prospectus filed with the US Securities and Exchange Commission on Monday.
In India, payments firm Mobikwik has received the Indian regulator’s approval for a $253 million IPO.
On the fundraising trail
Private equity firm Northstar Group, an early backer of Indonesian ride-hailing giant Gojek (now GoTo), is targeting to close its fifth fund by the end of this year. However, the fund will be smaller than its initial target of $800 million.
“What we are planning to do is have a slightly smaller fund. It took us many years to fully invest Fund IV. In Fund V, we will have a higher velocity of investing,” said Northstar co-founder and managing partner Patrick Walujo at DealStreetAsia’s Asia PE-VC Summit 2021.
US-based high impact entrepreneurship organisation Endeavor Global, which has invested extensively in Southeast Asia in the past, is planning to launch its fourth VC fund with a corpus of $200-250 million, its managing director Allen Taylor told DealStreetAsia.
NZ Super Fund, the country’s sovereign wealth fund, has committed up to $144 million to the latest sustainable energy-focused vehicle of Copenhagen Infrastructure Partners (CIP).
DCP Capital Partners, a Hong Kong-based Asia-focused private equity firm, has made another close of its second PE fund at about $2.16 billion.
One for the weekend
Edtech startups — that bagged a total of $39.2 million in the first quarter of 2021, which is almost three-quarters of the $54 million funds raised in the entire 2020 — are not going anywhere even when schools and campuses reopen after the pandemic.
“Going forward, we see there will be no difference between digital learning and offline learning,” Tomy Yunus, co-founder and CEO at Cakap told DealStreetAsia.
However, a key question playing on everyone’s mind is about the relevance of the sector post-pandemic. Read the details here.